Friday 12 March 2010 19.11 EST
First published on Friday 12 March 2010 19.11 EST

Politics is ultimately about interests. Morals and highfalutin principles have their place, but a more reliable truth is that governments and countries usually act in their own self-interest. Usually. The way Israel greeted the visiting US vice-president, Joe Biden, this week offers an intriguing exception to the rule, a rare instance of a state acting in a way that brings itself almost no benefit and delivers a huge amount of self-inflicted harm.

Instead of embracing Mr Biden, Israel showed him the finger, choosing the very day of his visit to announce the construction of 1,600 new housing units in East Jerusalem. That counts as an in-your-face insult to a US administration that has demanded Israel freeze all settlement activity in the territories conquered in 1967, which include East Jerusalem. Little wonder that President Obama was said to be "incandescent with anger", spending 90 minutes on the phone to his deputy drafting a statement of condemnation rare for its ferocity.

The Israeli press has been full of conflicting explanations for this extraordinary behaviour. Some suggest Binyamin Netanyahu, the prime minister, was a fool, haplessly unaware that a lower-level planning committee was about to make the move. Others wonder if Mr Netanyahu was a knave, seeing some perverse value in advertising Israel's defiance, demonstrating to the world that it can, in the words of one senior European official, "put sticks in the Americans' eyes" and get away with it. As one Israeli commentator has put it, neither of these possible explanations are very attractive: they are like choosing between plague and cholera.

The harm done to Israel's own interests is huge. It is bad enough to insult your most loyal ally, especially when that ally happens to be the sole superpower, with unique influence over the region. But it is positively reckless to insult the figure widely acknowledged to be Israel's greatest friend within the entire US administration, a man who proudly calls himself a Zionist.

Above all, Israel's move came just as the US was set to announce a new round of proximity talks with the Palestinians. Predictably, those have now been jeopardised. And yet what is the ultimate aim of those talks and the entire Middle East peace process? It is the establishment of a viable Palestinian state alongside a secure Israel. That scenario is the preferred outcome of a vast international consensus, but it is also, as most Israelis now recognise, in the best interests of Israel itself. By its continued settlement expansion, and its cack-handed treatment of its friends, Israel makes the two-state solution ever harder to realise. That is not just bad news for the Palestinians; it is bad for Israel.